BRITAIN AND THE E.U. (2)

The sleepwalking to the exit scenario that I mentioned back in June looked a touch more likely today. That is because the U.K. has just been presented with a £1.6 billion bill from Brussels, as an additional contribution to the E.U.'s budget. Cue lots of frothing from the mouth. And not just from the usual suspects on the Conservative Party's backbenches, but also from Prime Minister David Cameron himself.

The reason for the bill is the adjustment to national accounts that all countries, not just E.U. Member States, are currently undergoing. With respect to Britain, that exercise has made the economy larger. Since contributions to the E.U. budget are made on the basis of the size of their economies, that means that Britain has to pay more.

Under normal circumstances, finding out that you have a bigger economy than you thought is a good thing (France, for instance, has discovered that its economy is smaller, and so gets £801 million back; Denmark gets £253 million back, an even greater amount relative to population). However, anything to do with the E.U. does not constitute normal circumstances in Britain, even though in this particular instance, the E.U. is getting about Euro 420 million less overall than it did before.

What is surprising is not so much the public reaction, but the fact that David Cameron didn't see it coming. After all, the contribution rules were agreed by all the Member States, and are very clear; and he must have been briefed by the Treasury about the economic statistics, not least because he will have wanted to brag about it. Somehow, though, the two things became disconnected in his brain. As I say, sleepwalking.

Walter Blotscher